STUDY: Cities That Ban Ridesharing Cost Their Own Economies Millions

Cities like Buffalo and Kansas City could see about a $20M spike in additional spending in their local economies…

By NTK Staff | 02.23.2017 @8:56am

It turns out ridesharing is good for the economy. That’s according to a new study by Land Econ Group that found states like Missouri, New York, and Texas are missing out on millions in local revenue because they currently bar popular ridesharing services like Lyft and Uber.

The study, which focuses on six cities that do not have Lyft – Buffalo, Rochester, Austin, Houston, Kansas City, and St. Louis – found that riders would generate $19.3M (in Rochester) to $36.4M (in Houston) in additional spending in local economies. Drivers in those cities would also earn anywhere from $8.7M to $30.2M from Lyft rides. Here’s how they calculated those numbers:

By considering and weighing three variables, the study predicts the number of Lyft rides that would have occurred in a city’s third year of operation. These variables are metropolitan statistical area population, median household income, and city density as measured by persons per square mile.

After projecting the number of Lyft rides that would occur in a city’s third year of operation, measures of economic impact – including drivers’ take home income and the economic benefit to local businesses – can be estimated with high levels of accuracy.

Lyft’s data from its areas of operation allows for reliable estimates of what cities without ridesharing are missing out on. For example, Kansas City is comparable to Lyft’s markets in Nashville and Orlando and St. Louis has many demographic similarities to Pittsburgh and Atlanta.

Check out the graphic below for a detailed breakdown:

In Buffalo, for example, the poverty rate stands at 31 percent, which is nearly two and a half times greater than the U.S. average. In Rochester, that number stands at one-third of its population.

Ridesharing services like Lyft and Uber argue they can begin to drive down those rates by providing good-paying, flexible jobs that can spur local economies in Missouri, New York, and Texas, but not until those states decide to allow ridesharing.